We will be at the bottom when there is no supply of homes that are being sold for less than the cost to build. A builder acquaintance in Atlanta just had to give back 7 houses. Those 7 houses will be in competition with other individual sellers houses until all 7 are gone. I see why I as a seller wouldn't want the prices of those 7 to be used as comps, I also see why I as buyer am going to use those prices to browbeat an individual seller into compliance...or not..they don't have to sell to me.
Agree that we will remain at bottom until that point.
I don't think anyone can go wrong buying a house below cost (as long as there's nothing wrong with it from an construction or aesthetic standpoint). Buying homes below cost, to me, definitely represents the bottom of the market because it can't last forever. There are plenty of buyers out there wanting to snap up properties selling drastically "below cost" in WaterColor.
Appraisers are still not supposed to use distress sales as comps. From a lender's perspective, they will be willing to lend on like properties selling for MORE than the distress prices (assuming a solid, willing, and able buyer), because the lender is evaluating it from a perspective of risk. The lender understands that the distress sale is below market, so they don't use them as a determination of market value to deny a loan (which they want to make) to a buyer.